Executive Intelligence Review
Subscribe to EIR


Ex-CFTC Chief: Misconduct in Derivatives Trading Is Massive

March 24, 2017 (EIRNS)—The former Chief of Enforcement at the Commodities Futures Trading Commission (CFTC) pointed to "A massive amount of misconduct" in the futures, options and swaps market in an interview with Reuters Karen Freifeld today. Trump has pledged to ramp up the prosecutions.

Aitan Goelman, who stepped down last month as Enforcement Chief of the CFTC—the top U.S. agency which regulates derivatives—told Reuters that it did not have the sophisticated software and staff necessary to uncover many suspicious trading patterns within the 325 million records filed each day.

There is much more manipulation, insider trading, front-funding, and Ponzi scheming in the markets than is being prosecuted, Goelman stated, since the CFTC receives data from the traders, and won enhanced enforcement authority in 2010.

"We could do a lot more manipulation cases. We have all these new enforcement tools and vastly expanded jurisdiction and data, but ... limited resources."

At present, two-thirds of the leads on misconduct that come into the "triage unit" of the CFTC’s enforcement division are not pursued, because of lack of resources, lack of evidence, or jurisdiction. "It’s really an untenable situation," Goelman said.

Public Citizen, which serves on an advisory committee to the CFTC, laments the CFTC’s limited funding: its annual budget is a mere $250 million, with only 20% allocated for enforcement. Acting CFTC chairman J. Christopher Giancarlo, President Trump’s nomination to serve as Chair, said last week that there would be aggressive enforcement by the CFTC under the Trump administration. He has asked James McDonald, who just left the Manhattan U.S. Attorney’s office, to oversee the enforcement unit.

In 2008 under Obama, the CFTC’s budget was a mere $111 million, even after the 2008 crisis had hit. By 2016, it had only inched up to $250 million. Obama and his Attorney General, Eric Holder, produced much anti-banker rhetoric, along with Rep. Maxine Waters (D-Calif.), then-Chair of the House Banking committee. But, under Obama and Holder, not one single banker was ever criminally prosecuted for financial crimes in eight years.